The Hidden Costs of Legal Spend Management Software

Legal spend management technology generates savings for in-house teams in many ways. We wrote a blog on six of these ways. The most obvious is through cost savings, whether that be through a greater ability to ensure firms adhere to billing guidelines, having visibility of spend, or using data to make future budgeting decisions. Time savings are also generated though the automation of laborious tasks like invoice review and reporting and these can be calculated into monetary amounts.

Using these savings areas, different eBilling software providers will estimate savings from $46,000 to $800,000 per year for a “typical” legal department. However, to truly know the financial impact, the cost of investment must also be considered and this is typically less publicised!

Below are some of the cost considerations to bear in mind when planning your legal spend management project and selecting a vendor.

Cost of software

This is usually a fixed subscription fee per annum and may or may not include hosting, training, and maintenance costs, so look out for these on the proposal. The first year may be higher than subsequent years due to initial set-up costs. Subscription fees may be based on one or a few of the following factors: legal spend, numbers of users, volume of matters and number of law firms. Consider the best pricing model for you now but also bear in mind your department might grow; how long is your subscription price fixed for, if at all? If you grow, how does the price increase? Also consider the cost of additional features not included in standard packages.

Implementation fees

Unlike on-going subscription fees, these are one-off costs payable to the software vendor and/or consultants you may have involved, usually in the first year but you may have requirements further down the line that add a cost. These fees cover the cost of on-boarding internal users and law firms, integrations, and customisations such as reports, data migrations and add-ons outside the basic package. Be sure to find out the charges for these.

Internal costs

Most modern solutions are now cloud/SaaS based. Security concerns were the main reason for housing software on-premise when eBilling was first launched, but cloud security is far more robust these days. If this a concern, make sure your vendor has the appropriate certifications, such as ISO/IEC 27001:2013. SaaS solutions carry a much lower internal IT cost than on-premise solutions. You may still have to factor in contractor or project team costs though.

Training and support costs

A user-friendly, familiar, and easy to learn interface reduces the training required for your in-house teams and firms, but it will still be necessary. Consider what level of support and training you require at implementation and beyond as these range from online help only through to fully managed services and the costs vary considerably.

Upgrade costs

Do you need to pay to upgrade to future versions and updates of the software or is this included? You could fall behind on the latest features if the upgrade cost is prohibitive. Consider the internal costs and impacts of these upgrades, which are lower with SaaS solutions.

Future costs

While you don’t have a crystal ball, try to anticipate potential integrations or features you might need and ask a) if they’re available and b) what these will cost. You want to avoid migrating to a different solution if your current one no longer meets your needs or becomes too expensive for your needs, so try your best to predict this; ask the vendor the typical growth pathways of their other clients. A factor that affects most legal departments are cost increases as you add more users, spend and/or firms. Familiarise yourself with the pricing model to avoid surprises.

BusyLamp Legal Spend Management is cost effective. Even with these expenditure areas, BusyLamp generates a quick return on investment. You can work out your potential savings with our Guide to Building a Business Case for Legal eBilling, or fill out the form below and a member of the team will contact you to help you calculate your costs and projected ROI.

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